Day: 2011/01/20

FILM REVIEW: Default: The Student Loan Documentary

Krotala Films gave me the privilege of reviewing Default: The Student Loan Documentary. I didn’t expect blogging would lead me to film reviews. Indeed, that’s more my brother’s bailiwick. But like Marty McFly, when someone calls me chicken…

While I don’t have an eye for composition (Default had an attractive color scheme and looked great in Hi-Def), I can waddle through some of its arguments and points.

1.  I think it was Alan Collinge of Student Loan Justice who delineated the triumvirate of players: LendersCongressUniversities. He lays out how lenders influence Congress into passing student debtor-unfriendly legislation. I also liked how the history of student lending traced back to a fluke in the Great Society. I hadn’t realized that people were considering a tax credit rather than a lending program.

2.  The students’ stories were compelling, and chalkboarding their loans was an effective visual. I’m glad the students all discussed their part-time or full-time work. It helps counter the arguments from those criticizing students for laziness.

3.  Default claims the student debt problem has grown in the last 10 to 15 years, which I hadn’t heard before. I’d heard the problem originated in the late 1970s when bankruptcy protections were first removed from student debt.

4.  Sallie Mae benefits from defaults. I never understood why until now. SLM can print money by charging defaulting debtors whatever fees it wants, and debtors can’t negotiate them or discharge them in bankruptcy.

My greatest difficulty with the movie was wondering what I would’ve done with 27 minutes. It’s not a lot of time to present the problem, but I felt the film’s tone arced well throughout. The producers deserve credit for working with the time they had.

Some things I would’ve added:

1.  Apologists dismiss critics with the, “You borrow it; you live with it,” argument. That’s the largest obstacle to reform. I think asking one of the borrowers what she or he thought of it would’ve been interesting.

2.  As you can imagine, I wanted more on how universities have been increasing tuition due to free money from the government. A profile of how one university spent the money would’ve connected them better to the triumvirate Collinge outlined above. For example, the details and stories Mish Shedlock describes in this post make me want to set the nearest free-spending university on fire. Moreover, this explains the problem mentioned in the movie of Pell Grants’ decreasing value: it’s not that they don’t keep up with tuition or inflation; it’s that tuition is growing out of control.

3.  Towards the end, one borrower said that education leads to a just society. This is the great philosophical issue underpinning all higher ed discussions. It’s an Enlightenment-era sentiment: knowledge both liberates us from superstition and leads us to progress. I agree with this sentiment—or at least, I want to agree with it, for yours truly has two humanities degrees, a law degree, a social science degree, and was once a teacher himself. I appreciate the education I received. However, the great counterargument to the excesses of our higher education system isn’t coming from mildly statist social liberals like myself but from conservatives and libertarians such as Shedlock above, or for you academics: Charles Murray and perhaps Richard Vedder. These are individuals who adamantly claim that higher education isn’t for everyone, is wasting resources because many college graduates end up in jobs that don’t require college educations, and worse holds people to intellectual standards they can’t meet. When confronted with universities’ decadent spending, I’m finding myself agreeing with them, though I hope the emancipatory aspects of the humanities can be shifted into lower education or be sold a lot more cheaply. If the movie had another half hour, it could’ve related the student debt nightmare to spending and then on to this higher level of analysis. Those interested can watch a longer, more sterile discussion on Blogging Heads.

4.  I also would’ve added an economist to describe what would happen if student loan debt were forgiven. I’m not that person, but the idea isn’t as radical as the lawyer in the movie made it out to be. Bailouts rescue both the debtor and the creditor. For the federal government, this’ll rescue itself from an open wound hemorrhaging tax dollars. It would stimulate the economy, since the money would be spent productively rather than getting hosed up by loan corporations and collectors. Finally, it could be financed by the Federal Reserve printing the money, buying the necessary Treasury securities, and then rebating any subsequent interest back to the Treasury. This would leave no interest burden on future Americans.

5.  Finally, there are three efforts improving the student debt situation that may’ve been worth mentioning. One is the Private Student Loan Bankruptcy Fairness Act/Fairness for Struggling Students Act (that’s probably going to stall in the new Congress). The second is the Department of Education’s Gainful Employment rule change that will curb for-profit higher education, and the third is the non-profit advocacy company, All Education Matters run by Cryn Johannsen.

There was one point I disagreed with:

At one point someone said that we spend more on the elderly than on the young. Government spending on the elderly comes largely from Social Security, which they paid into when they were working. It’s their money, and they deserve the return because it was forced savings. We don’t need to impoverish the elderly to invest in the young.

I’m not going to give a thumb or star rating to Default. It’s message is more important than what more sophisticated reviewers can dissect that I cannot, but I hope Kratola can distribute it as widely as possible, especially to high school students who can best benefit from its warning.